The future may seem far away, but your potential later-in-life needs should be considered—and planned for—early.
Many people put off planning for long-term care simply because they don’t want to think about the possibility that one day they’ll need help with daily living. Yet developing a plan for the future can prevent health care costs from depleting your wealth. “The most important thing is to set aside negativity, because approaching the question of how to pay for long-term care is very much a positive step,” says Bryan Koepp, wealth planning executive at Regions Bank. Not only will it help preserve your wealth, but having a plan ready can reduce stress when and if the day comes that you require long-term care.
By working with your team at Regions and other key advisors, you can develop a reassuring long-term care plan, which you should revisit regularly and adjust as your priorities change or new care options emerge.
The good news is you don’t have to do it all at once. Here’s a rough schedule for getting a long-term care plan in place.
When you’re in your 20s, 30s and 40s
No matter how young and healthy you feel, it’s an inescapable reality that an accident or illness could leave you unable to make decisions about your health care. It is never too early to start planning. Here’s what you should consider when you’re still relatively young.
- Appoint a durable power of attorney for health care
“Appointing a durable power of attorney establishes a decision maker to do those things for you if you can’t do it yourself,” says Koepp. If you’re married or in a long-term relationship, then your spouse or partner may be the natural choice for durable power of attorney. However, an adult child or friend can also serve the role. Koepp recommends choosing someone you know can make difficult decisions (and if they have a medical background, all the better). It’s essential to have a detailed conversation with the person you choose about your priorities, such as what types of treatment and care you prefer. “That way, you’ve guided them to respect and fulfill your wishes,” says Koepp. - Draft a living will
This document spells out your wishes if you become ill or disabled and can’t communicate with health care providers. A living will is particularly valuable if doctors must make decisions about using interventions such as feeding tubes and respirators. If you have appointed a power of attorney, their decisions cannot override the terms stated in a living will, so it provides you greater control over how your future health care is handled. “End-of-life decision making can be very emotional, and conflicts about what’s the right choice can arise among families and friends,” says Koepp. “A living will provides clarity by communicating your intentions.” - Set up a revocable trust
This step is often overlooked, says Koepp, but having a revocable trust can be a critical third pillar to protect your wealth. Typically, you appoint yourself as trustee of a revocable trust, but also name a successor who can make decisions about your financial affairs if you become incapacitated. Having a revocable trust can also allow for your assets to avoid probate when you pass away, adds Koepp.
An estate planning attorney can assist with these three steps. However, an elder law attorney may be a better choice in more complex circumstances, such as if a person becomes incapacitated but doesn’t have a long-term care plan in place.
When you’re in your 50s
As you age, your needs and goals will naturally change. You will also start to get a sense of your long-term needs. There are still a lot of unknowns, but planning may become more concrete.
- Evaluate long-term care insurance
Now is a good time to consider purchasing long-term care insurance, which can provide coverage for nursing home care, assisted living, in-home care and other services you may require as you age or if you become incapacitated. In the past, a common argument against long-term care was that you could end up paying for benefits you’ll never use. “But with a lot of the products now, if you don’t use it, you don’t lose it,” says Koepp. New generation “hybrid” policies are available that combine long-term care and life insurance or an annuity. If you don’t use your long-term care benefits, these policies generally offer a death benefit or a return of premium to your beneficiaries.
Long-term care insurance isn’t right for everyone, and some products are better than others. “Make sure you know what you are buying to ensure it meets your needs and provides financial leverage and efficiency,” says Koepp. Work with a wealth advisor or insurance advisor to determine if a policy makes sense for your circumstances. Be sure to tell your estate planning attorney if you purchase a policy, which could have ramifications for your trusts and beneficiaries.
In your 60s and beyond: Explore your options
For many, this is a time for enjoying grandchildren, traveling and enjoying the next phase of your life. But it’s also important to start evaluating long-term care facilities and in-home services in your community, in the event you need them one day. Let family members and your power of attorney know your preferences.
Talk to your Regions Wealth Advisor about:
- The details of establishing a revocable trust as a part of your personalized wealth plan.
- How to better shield your family’s financial resources as you manage your health care needs in the future.
- Working with legal counsel to establish foundational documents, including a durable health care power of attorney and living will.
Interested in talking with an advisor but don’t have one?
Find a contact in your area.
